US-China truce? More like turbulence.
Memory is fickle. The world is forgetting that two weeks ago, China fired multiple cannons, simultaneously curbing Nvidia chips, probing Qualcomm, and of course, introducing export license requirements for any product that used more than 0.1% of Chinese rare earths. The license move has been merely paused, not shelved. Strangely, nobody asked the most important question: how exactly would China enforce it?
Illusion of Calm
Do not be fooled, the meeting between President Trump and President Xi in South Korea changes nothing.
Instead, it is the biggest sign that America and China are on a collision course, and renewed fighting is almost guaranteed in the near future. Even markets have not rallied. Beyond oil equities dropping, many investors are unsure of what bet to make as geopolitical whiplash worsens, a massive shift from April, when many believed the “worst was behind them.”
The market is not rewarding China restarting soybean purchases, or America lowering tariffs on Chinese imports in exchange for fentanyl relief. Why would they? Soybeans, smiles, and a sprinkle of TikTok only reinforce how limited US-China cooperation has become.
Three Flashpoints, One Collision Path
China now calls the shots. America is trying to keep China cool and calm. This is a completely different status quo. The US and China have failed to address the most consequential issues plaguing their relationship. At the top of the ticket (why a new fight is all but guaranteed):
The US is threatening massive moves against Russia, including sanctions, to end the war in Ukraine. Except, almost 50% of Russian crude oil goes to China (and India is a close second). Stopping the conflict means punishing China. Queue a post on Truth Social in November threatening China with 100% tariffs?
American assets are building up in the Carribbean, raising the probability of a strike on Venezuela. After leaving Iran out to dry, China might not sit still if Venezuela is struck and chaos follows. This is not just about Chinese energy security (around 90% of Venezuelan oil exports go to China). This is also about regional economic stability. If the US and Venezuela swing, South America gets rocked—and so do the hundreds of billions China has invested/loaned to Latin American nations.
A second war between Israel and Iran is a question of when, not if, as Iran quickly rebuilds its air defenses. With a “kind of ceasefire” in place in Gaza, Israel is likely to turn its spotlight back towards Iran and the remaining proxies. Now, new Western intelligence reports point to China quietly helping Iran rearm. And, Iran is slashing oil prices for China, as much as $10/barrel. Remember Trump’s warning from May: Any nation that buys oil from Iran cannot trade with America.
These are just three flashpoints, all of which are accelerating in real time. Unless the US has some master plan to void every warning made so far, China’s behavior is flying in the face of America’s demands.
Tech Is The True Battlefield
Surrounding all this, the main catalyst of the US-China fight, technology, is in choppy waters. The Chinese are advancing across the globe. In the UK, BYD sales are up 880%. Last month, BYD’s sales in Europe were up fivefold. While the US holds back chips, China is unleashing EVs.
It is not a pretty picture for Beijing either. The US-Malaysia deal is a turning point in deal making. Malaysia must now mimic every US trade action and sanction. When the next US-China fight begins, Kuala Lumpur could be swinging at China, disrupting Asia.
“Civilized Hostilities”
Perhaps, the Korea meet was just the opening for bigger negotiations. Perhaps, the US and China are tired of fighting. Sometimes, friction gives way to love. Maybe TikTok will finally be solved after a decade of being held hostage.
Except, geopolitics is never measured by photo-ops or statements. It is measured by trajectories. And every trajectory now points toward confrontation. Beijing’s power is not enforcement — it is uncertainty itself. When (and how) will China strike next?
The US and China are in “civilized hostilities,” for now.
But, as the arch of recent history suggests, civility never lasts long.
-ABISHUR PRAKASH AKA. MR. GEOPOLITICS
Mr. Geopolitics is the property of Abishur Prakash/The Geopolitical Business, Inc., and is protected under Canadian Copyright Law. This includes, but is not limited to: ideas, perspectives, expressions, concepts, etc. Any use of the insights, including sharing or interpretation, partly or wholly, requires explicit written permission.